Live Gamer Inc. has typically provided virtual currency services to video game developers, but as Nevada prepares to let casinos take their high-stakes games online, the vendor is betting that its expertise will prove valuable when the games put real cash at stake.
To make its case to casinos, Live Gamer is partnering with Global Cash Access, which provides cash management and payment processing to those brick-and-mortar (and neon) establishments. The companies predict that online gambling will grow to become a multi-state industry.
“We saw an opportunity for us to apply the principles and technology that we’ve seen in the online game space and partner with someone who has the expertise in the wager-based game space,” says Live Gamer president and co-founder Andrew Schneider. “We want to deliver the types of solutions that we provide in the play-for-fun space to innovative and emerging developers of online wager-based gaming.”
Live Gamer’s technology is used by Facebook, Electronic Arts, Take 2, Sony Online, Namco Networks, REAL Networks and THQ. With Global Cash Access, Live Gamer would supply the payment platform for GCA’s future clients who want to transition to online gaming.
There is real money to be made in moving virtual currency. Ahead of its initial public offering, Facebook disclosed that it received 15% of its $3.7 billion in revenue last year from payments. Much of this revenue came from facilitating payments for Zynga, the company behind the popular Farmville game.
The rise of social video games on Facebook and similar sites, as well as the opportunity to monetize them, demonstrates an opportunity for casinos, says GCA CEO Scott Betts.
"Bringing both the social and the wagering piece together gives us the best technology and the most tools to give our customers to move into the online space," Betts says.
Until other states allow real-money gaming online, GCA clients can use its connection to Live Gamer to enable social and play-for-fun gaming, Betts says. Users of the gaming sites will need to load money into the site to play. GCA will process payments using Live Gamer’s online payments platform and e-wallet functionality, integrating them into GCA's back end and compliance software, which is required for casino gaming, Betts says.
The companies are not disclosing terms of the deal or revenue sharing.
The 2006 Unlawful Internet Gambling Enforcement Act disallowed the transfer of funds to online gaming sites in the U.S. However, some states besides Nevada are showing signs of permitting online gambling. For example, a federal judge in New York this week determined that poker is more a game of skill than chance, making it possibly exempt from laws that govern gambling.
Betts says social gaming demonstrates a fresh appetite among consumers to play games online —a greater appetite than they had when the 2006 law was passed.
“You can’t completely lose sight of the explosion of online gaming in terms of social gaming, gaming for free,” says Betts. “Look at where the best, most current technology lies. Both in a player's experience and the quality of the website, it’s really in social gaming, which has exploded worldwide in the last two and half years."